Minimultinationals

Blog

The Tax Cuts and Jobs Act completely rewrote Section 965 to force a one-time repatriation of deferred earnings and profits in foreign corporations. It forces income recognition in the 2017 tax year, so there is not a lot of time to figure this one out!

I call this a workshop because the intention is for Rufus to talk a bit about the new law, then we will open it up for questions and input. Some of you out there are smart about Section 965, so please share with us.... continue reading

Does a treaty election to be taxed as a nonresident of the United States trigger a Form 5472 filing requirement? The Schrödinger’s cat meme gives us the answer. Yes and no.

The Setup

Imagine a green card holder living outside the United States. She is the sole shareholder of a domestic corporation.

For various good and valid reasons, our green card holder decides to make an election under the applicable income tax treaty’s tiebreaker rules to be treated as a resident of the foreign country where she lives, and thereby be treated as a nonresident of the United States for income tax purposes.... continue reading

Our trusted servants in Washington DC blessed us with a new tax law, effective December 22, 2017. The new law–the Tax Cuts and Jobs Act of 20171 –did not change the expatriation tax rules, but it did make expatriation more attractive to a certain group of Americans abroad.

Tax Cuts and Jobs Act of 2017

The Tax Cuts and Jobs Act2 changed many, many parts of the Internal Revenue Code. The international tax rules, in particular, have been massively changed.

But Congress did not touch Sections 877A or 2801 of the Internal Revenue Code. Those are the two special-purpose statutes that impose tax on people who renounce US citizenship or abandon their green cards.... continue reading

The GILTI software developer, electing corporate tax rules

If you were paying attention to the tax law rewrite last year, you may have heard the term “global intangible low-taxed income” (GILTI). It is supposed to establish a minimum tax on foreign source income for multinational corporations. It also affects US citizens and residents.

Two posts ago, we covered what happens under the default GILTI rules if a US citizen owns a software company abroad. In summary:

Almost all the profits of his company is taxed to him each year as GILTI regardless of whether the company distributes the profits.

The GILTI is taxed at ordinary income tax rates, overriding qualified dividend rules for companies in treaty countries.